Pierce Butler

“ The Senate amended by substituting 'depreciation' for 'exhaustion, wear and tear.' In conference, that word was taken out, and the provision was made to read as it now stands, 'a reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.'
None of the acts made any classification based on the causes from which obsolescence results. And, as the sole purpose is to arrive at the net income subject to taxation, it is clear that such a discrimination could not reasonably or justly be made. ”

“ The tangible property by which a business is carried on is plainly distinguishable from the element of good will inhering therein. The cost of plant depreciation, i. e., exhaustion, wear, tear, and obsolescence, is a part of operating expenses necessary to carry on a manufacturing business. The gain or loss in any year cannot be rightly ascertained without taking into account the amount of such cost that is justly attributable to that period of time. ”

“ The buildings were constructed especially for the purposes of such manufacture, and were not commercially adaptable for any other use. They had no salvage value. As a result of prohibition and beginning January 31, 1918, and ending January 16, 1920, plaintiff suffered obsolescence of such buildings equal to such depreciated cost which should be ratably apportioned over that period. After making provision for allowances for such obsolescence, plaintiff had no net income for 1918 or 1919. ”